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China Sept official factory PMI contracts for second month

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Activity in China's manufacturing sector contracted for a second straight month in September, an official survey showed on Thursday, adding to signs of weakness in the world's second-largest economy which are shaking global markets.

[BEIJING] Activity in China's manufacturing sector contracted for a second straight month in September, an official survey showed on Thursday, adding to signs of weakness in the world's second-largest economy which are shaking global markets.

The official Purchasing Managers' Index (PMI) inched up to 49.8 in September from the previous month's reading of 49.7.

Though slightly better than market expectations, it still suggested conditions were deteriorating.

Analysts polled by Reuters had expected the figure to dip to 49.6, the weakest level since August 2012, as softening demand at home and abroad left many firms with idle capacity and less appetite for raw materials from iron ore and copper to petrochemicals and coal.

A reading over 50 points suggests an expansion in activity while one below that level points to an contraction on a monthly basis.

The government is due to release third-quarter GDP data on Oct 19 and many economists expect growth to dip below 7 per cent, which would be the weakest since the global financial crisis.

Some China watchers believe current growth levels are already much weaker than official data suggest.

A summer stock market crash and China's surprise currency devaluation in August have raised fears of shocks to the economy which could see it slowing more sharply than earlier expected, jeopardising the fragile global recovery.

Since the devaluation, top Chinese officials have repeatedly tried to reassure nervous global investors that they are in control of the economy and denied that it is at risk of a hard landing.

REUTERS